Sep 30, 2020

Axios Generate

Good morning. Today's Smart Brevity count: 1,312 words, 5 minutes.

🚨 Situational awareness: "Scientists developing a compact version of a nuclear fusion reactor have shown in a series of research papers that it should work, renewing hopes that the long-elusive goal of mimicking the way the sun produces energy might be achieved and eventually contribute to the fight against climate change." (NYT)

🎵 And today marks 35 years since Tom Waits released "Rain Dogs," which provides today's intro tune...

1 big thing: Climate's surprise appearance in the nutty debate

Illustration: Annelise Capossela/Axios

The debate was a mess as moderator Chris Wallace struggled with President Trump's interruptions. But let's analyze the climate parts anyway without normalizing the whole thing.

Why it matters: The contest provided a collision over the topic between Trump and Joe Biden, and underscored the two candidates' immense differences.

Here are a few takeaways...

1. Surprise! Climate wasn't on the list of topics Wallace planned, and his multiple questions, beginning about 75 minutes in, provided a lengthy exchange.

2. Biden has a complicated relationship with the climate left. The former VP said "the Green New Deal is not my plan" and "I don't support the Green New Deal."

  • But his online climate platform unveiled last year called the GND a "crucial framework for meeting the climate challenges we face" without endorsing it outright.
  • And more recent changes have moved his plan closer to what activists want, notably a 2035 target for reaching 100% carbon-free power and a proposal of $2 trillion in climate investments over his first four years.
  • Still, there are limits. For instance, Biden recently emphasized that he's not seeking to ban fracking.
  • It's part of a delicate balance to keep his coalition together, and key GND backers are willing to give him some space for now.

3. Trump still rejects consensus science. Asked whether human-induced emissions fuel climate change, Trump said, "I think a lot of things do, but I think to an extent, yes."

  • That's a tad different than his past rejection of global warming as a hoax. But still at odds with the scientific consensus that humans are the dominant driver of ongoing warming.
  • Anyway, the slight change in posture didn't come with a pivot away from rolling back climate rules or any policy shifts (with a small asterisk I'll get to next).

4. Trump muddied his position on EVs. Trump said "I think I’m all for electric cars" and "I’ve given big incentives for electric cars."

  • In fact, the White House has previously proposed ending tax credits for EV purchases, but Congress has not gone along.

5. Trump made other questionable or inaccurate statements. For instance, he claimed the Green New Deal would cost $100 trillion.

  • The conservative group American Action Forum has offered an estimate of up to $93 trillion over 10 years (while acknowledging it's steeped in uncertainty).
  • Useful long-term estimates are impossible because the GND is a vague, sweeping set of concepts, not a piece of legislation.

6. Biden took too much credit for renewable cost declines. Touting the Obama-era stimulus he helped oversee, Biden said he was able to "bring down the cost of renewable energy to cheaper than, or as cheap as, coal and gas and oil."

  • In truth a whole suite of forces — including, but not limited to, federal investments in the stimulus and elsewhere — have led to huge cost declines over the last decade.
Bonus: An intriguing answer

One interesting moment wasn't in the climate section.

Driving the news: Earlier in the debate, Biden flatly refused to say whether he supports ending the Senate filibuster.

Why it matters: If he wins and Democrats gain the Senate, ending the super-majority requirement would lower the immense hurdles in front of energy and climate legislation to some degree.

2. Total joins the peak-demand-is-near club
Screenshot of Total investor presentation

What's the hottest 2020 trend? Moving up your projections of the global oil demand peak.

Driving the news: Oil major Total, in a new analysis, sees demand growth ending in a decade and then declining in their "momentum" scenario.

  • That's a world with some action on climate change, but not nearly enough to meet the targets of the Paris Agreement.
  • In their "rupture" scenario — aggressive policies coupled with tech breakthroughs — oil demand peaks "by 2030" and then falls to less than half of today's levels by 2050.

The big picture: Multiple analysts are accelerating their projections of when oil demand will stop growing, and some are more aggressive than Total.

  • A recent BP analysis sees that plateau early this decade — or even demand never reaching it's pre-pandemic levels if the world acts aggressively on carbon.
  • A DNV GL report this month also predicts peak already happened.

Why it matters: The peak's timing and the slope of its decline will affect emissions, corporate strategies and the finances of oil-producing nations.

Yes, but: The idea that peak demand is imminent isn't mainstream, even as the pandemic shakes up long-term analyses.

What we're watching: Keep an eye on what the International Energy Agency says in their long-term outlook next month.

3. Here comes a climate-focused SPAC

Source: Giphy

A group of energy industry veterans are launching a special purpose acquisition company (SPAC) aimed specifically at taking climate tech startups public.

Driving the news: The Climate Change Crisis Real Impact I Acquisition Corp. last night announced a $200 million IPO, with 20,000,000 shares priced at $10 each.

Why it matters: They're self-branding as "the world’s first climate-focused" SPAC to launch.

  • The new entity is poised to bring more capital into low-carbon tech companies.
  • Plus, some prominent names are leading. Co-founder and CEO David Crane is the former CEO of NRG Energy. Other co-founders include former senior GE exec Beth Comstock and John Cavalier, previously with Hudson Clean Energy partners.

The big picture: The SPAC, which is doing business as Climate Real Impact Solutions (CRIS), is looking at startups working on a range of technologies.

  • They're targeting sectors including renewables, grid stability, EV charging, climate-friendly liquid fuels, waste reduction, and sustainable farming.
  • They're also interested in the young but growing field of removing CO2 already in the atmosphere — an area also attracting investment from Bill Gates, Amazon and other deep pockets.

How it works: SPACs are public companies that operate as a shell, designed to acquire startups and thus make them public too.

  • SPACs aren't new, but 2020 has seen a burst of new ones and new deals.
  • Several companies in the electric transport space and other clean energy areas are going public via mergers with SPACs rather than traditional IPOs.

What we're watching: Who CRIS targets of course, and also other emerging players in the climate tech SPAC arena.

Bonus: More SPAC attack

Another one! This morning the Qell Acquisition Corp. announced a $330 million IPO, with 33,000,000 units priced at $10 each.

What's next: The SPAC led by Barry Engle, a former senior GM exec, will "search for a target in the next-generation mobility, transportation and sustainable industrial technology sectors," a release states.

4. Shell is cutting up to 9,000 jobs amid pivot

Royal Dutch Shell will shed up to 9,000 jobs as it undergoes a long-term restructuring around climate-friendly energy sources and grapples with the pandemic that has battered oil demand and prices.

Why it matters: The cuts could amount to over 10% of the company's global workforce, which was 83,000 at the end of 2019.

  • Oil giants are shaking up their plans as they cut costs and, for European-based majors, diversify over time away from fossil fuels that remain their dominant products.
  • It follows BP's June announcement that it's cutting its global workforce by 10,000 jobs, or 14%.

Driving the news: Shell expects to reduce its workforce by 7,000 and 9,000 jobs by the end of 2022, which it said will help achieve $2 billion to $2.5 billion in annual savings.

  • "We have to be a simpler, more streamlined, more competitive organization that is more nimble and able to respond to customers," CEO Ben van Beurden said in remarks released Wednesday.
  • The total jobs-cutting figure includes around 1,500 people who have "already agreed to take voluntary redundancy this year," he said.

Go deeper: Shell to cut up to 9,000 jobs as virus accelerates overhaul (Bloomberg)

5. Catch up fast: shale, Nikola, China

Oil-and-gas: "Oasis Petroleum Inc. said it has filed for bankruptcy with a deal to pare its debt load by $1.8 billion, becoming the latest energy company driven into chapter 11 by a volatile oil-and-gas market." (WSJ)

Electric vehicles: "General Motors Co and Nikola Corp have not finalized their deal to jointly build electric pickup trucks and hydrogen fuel cell tractor-trailers, one day ahead of the date targeted, and are continuing discussions, GM said on Tuesday." (Reuters)

More EVs: "German automaker Volkswagen (VW) is investing €15bn ($17.6bn) in the Chinese electric vehicle (EV) market, seeking to extend its push into the sector and its market share in the world's most lucrative EV market." (Argus Media)

Editor’s note: Story 3's bonus was corrected to show Qell had a $330 million IPO with 33,000,000 units (not $300 million with 30 million units).